Prices for new nonresidential construction rose more than 21% from February 2021 to February 2022, according to an Associated General Contractors of America (AGC) analysis of government data. (The association noted that more recent price announcements made after the February data was collected suggest contractors are experiencing even worse cost pressures this spring.)
The producer price index for prices changed by goods producers and service providers to nonresidential construction projects increased by 2% from January to February and 19.1% over the past 12 months. In comparison, bid prices as noted in the index for new nonresidential construction grew 0.6% for the month and 17% over the past year.
When breaking down material price increases over the past year by category, the climb looks even more daunting:
- Diesel fuel (57.5%)
- Steel mill products (74.4%)
- Aluminum mill shapes (37.3%)
- Plastic construction products (35.6%)
Other products exceeding a 20% price increase from last year to now include copper and brass mill shapes (24.4%); lumber and plywood (22.5%); asphalt, tar roofing and siding products (22.5%); gypsum (20.7%); and architectural coatings (20.3%), AGC said. Furthermore, other input categories with increases reaching double-digit percentages over the past year include truck transportation of freight (19.1%), insulation materials (17.8%), concrete products (10%) and flat glass (10%).
Association officials said rising materials prices and tight labor market conditions are forcing contractors to charge more to build projects. They warned however that further price increases could undermine demand for some construction projects, threatening the sector's recovery.
Bryan Mason, editorial associate